Firstly, i have absolutely zero knowledge in anything to do with money, mortgages, or any financial stuff at all to be honest. We will be seaming professional advice but in the mean time there’s you lot…

My mother has decided that she wants to sell our family home as we have all grown up and moved out and she’s rattling around in a 4 bedroom house. It’s been in the family since new, about 25 years and it’s worth approx £285k. She is completely mortgage free as of April.

She has suggested that she wants to sell it, buy a smaller house for about £200k and then give me about £40k as a deposit towards my first home. I currently rent a 2 bed flat with my girlfriend and our 2 month old son.

She has now also suggested that maybe we should live in the house, and we should buy a smaller house for her to live in, a sort of house swap. Problem is we have no savings so will not be able to get a mortgage, and even if we could it would probably be for a laughable £100k.

Any ideas, advice or suggestions?

Bucko

move in.

pay her rent.
get free childcare.

what jambo said – she’ll be able to uses the equity in her property to get the mortgage no problem, you just need to make sure she can continue to pay it by paying her the rent.

Sounds like you can’t do the second option.
She would need to sell you the house otherwise she still owns it and you’d have issues when she dies.

Best option IMO is the first.
As long as she remains alive for 7 years after gifting you the 40k then you’re fine – 40k is a 20% deposit on a 200k house and if you can afford to rent a flat I it’s likely you can afford a mortgage on a house of that price. Interest rates mean the repayments are likely to be about £800

Make sure you do the sums though as interest rates are very low at present and if they were to double (which is only a few %) you need to be able to afford it. This would increase the mortgage to about £1k ish

Lots of assumptions and you need to work out what sort of mortgage would work but make sure you do it in a way that you both legally own your own homes.

jam bo – Member
move in.

pay her rent.
get free childcare.
this wont end well…..

Option would possibly (not a Financial advisor) you move in and pay buy house from her at sensible rate. She uses house equity to buy new house which your rent pays for.

second thoughts go see a professional

in the end it’s family so get the whole bloody lot in writing (blood is better) and make sure rest of family is on board.

Oh if your are buying the house do it as a private sale – you don’t need estate agents and can save a load of cash that way.

Selling the big place is possibly the easiest/cleanest option, however between you and your Mum you will be funding 3 property transactions (selling the big place/buying smaller house for Mum/buying a place for you and the Mrs)
If you would like to live in the big place you should be able to use the equity in it as a deposit on a smaller place for your Mum…
the downside to this is you might struggle to get £200k out of this arrangement, and I guess your Mum was also looking to free-up some cash to use for other stuff (she’ll end up with 85k, and was going to give you 40k)
However, if you don’t want to live in the big place, you’ve no option but to sell it.

I suppose option 3 might be to extend the big place and add a ‘granny annex’ for you Mum to live in – the building work could be funded by you, and if the big house was transfered to your name first (not sure on tax implications of this) you could take a mortgage out on it to fund the works, and possiblty even give your mum some cash (expensive way of giving her cash though)
The granny annex option is good because you all get your own space, but easy for you to keep an eye on her as she gets older… and it’ll add value to the big house.

Move in with her and save for a deposit?

Might not be the most comfortable arrangement (although, with 4 bedrooms it’s not exactly going to be cramped), but it’ll only be temporary, and it’s a decent way of getting a chunk of money together.

[Edit] Could hedge your bets, and put it on the market at the same time, houses seem to take a fair while to sell [/Edit]

Yep see if you can all live together – with a Granny flat or whatever. Would be most efficient financially and she’ll have you to look after her in her old age – which may or may not appeal to either party!

Following on from my earlier post – the fees/surveys/stamp duty/moving costs from selling one house and buying 2 others has got to run into £20k+

That would give you a good head start on a granny annex (work on £1200 per m2 for a single storey extension) + fees.

My head may explode soon. I think we all need to wait and get financial advice and just do whatever is best for everyone, whether we keep the big house or not. It’s too complicated for me to understand rigt now.

Cheers for the suggestions guys